M/s. Rajlaxmi Petrochem Pvt.Ltd, Latur V. Income-tax Officer, Ward - 1, Latur

ITA 1692/PUN/2019

AI Insights

The case involves M/s. Rajlaxmi Petrochem Pvt. Ltd., the appellant, contesting the validity of a re-assessment order for the assessment year 2010-11. The re-assessment was initiated by the AO based on information from the Investigation Wing regarding alleged bogus loans provided to the assessee. The primary legal contention was whether the re-assessment was conducted in accordance with the legal provisions of the Income Tax Act, particularly concerning the issuance of notice under section 148 without the requisite approval from the Pr. CIT. The Tribunal examined the procedural compliance of the AO in issuing the notice and found deficiencies that rendered the re-assessment invalid.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133019 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-02-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Tangible material; Bogus loan
• Section: 147; 148; 132; 143(3); 142(1); 143(2)

Judgement Text

आयकर अपीलीय अधिकरण “बी” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1692/PUN/2019 धििाारण वर्ा / Assessment Year : 2010-11 M/s. Rajlaxmi Petrochem Pvt. Ltd., 842, Inani House, Main Road, Latur – 413512 PAN : AACCR7636L .......अपीलार्थी / Appellant बिाम / V/s. The Income Tax Officer, Ward – 1, Latur ......प्रत्यर्थी / Respondent Assessee by : Shri Hariom Tulsyan Revenue by : Shri P.R. Mane सुनवाई की तारीख / Date of Hearing : 16-02-2023 घोषणा की तारीख / Date of Pronouncement : 21-04-2023 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 23-08-2019 passed by the Commissioner of Income Tax (Appeals)-2, Aurangabad [‘CIT(A)’] for assessment year 2010-11. 2. The ld. AR, Shri Hariom Tulsyan submits that the assessee raised legal ground in ground No. 1(a) to (f) challenging the validity of re- assessment made by the AO u/s. 147 of the Act. He submits that no new 2 ITA No.1692/PUN/2019, A.Y. 2010-11 facts are required to be examined and requested to take up the said legal ground as a preliminary issue. Upon hearing both the parties and with their consent, we proceed to hear the Ground Nos. 1.(a) to 1.(f) as preliminary issue. 3. The ld. AR submits that the AO erred in framing re-assessment not inconformity with the legal provisions of the Act. The AO only relied on report of Investigation Wing and drew our attention to the issue raised before the CIT(A) questioning the re-assessment proceedings are void-ab- initio. The CIT(A) without considering the material evidences on record, the said contention was dismissed upholding the re-assessment proceedings. The ld. AR drew our attention to the paper book No. 1 and strongly placed reliance from page Nos. 1 to 46 of the said paper book. He argued that the AO initiated re-assessment proceedings without any tangible material in his possession as on the date of recording reasons and issuance of notice u/s. 148 of the Act. He drew our attention to the copy of reasons for A.Y. 2010-11 at page No. 1.1 of the paper book. He vehemently argued that the AO issued notice u/s. 148 of the Act on 31-03-2017 without having tangible material in his possession. The assessee sought for copy of statement of Shri Anand Kumar Sharma required u/s. 132 of the Act and the AO requested for the said copy from the Dy. CIT on 20-12- 2017. Thereafter, on the next date i.e. 21-12-2017, the said statement of Shri Anand Kumar Sharma was provided to the assessee which clearly shows that the AO as well as the Pr. CIT were not having the said copy in their possession as on the date of the issuance of notice dated 31-03-2017 and approval (07-04-2017) by the Pr. CIT respectively. He vehemently argued that the re-assessment is invalid as the AO did not have any tangible material in his possession as on the date of issuance of notice u/s. 3 ITA No.1692/PUN/2019, A.Y. 2010-11 148 of the Act and the alleged approval as granted by the Pr. CIT on 07-04- 2017 is time-barred. 4. The ld. DR Shri P.R. Mane submits that the AO received information regarding providing bogus loans to assessee in a search conducted by the Income-tax Department, Kolkata. Basing on such information, the AO rightly issued notice dated 31-3-2017 u/s. 148 of the Act. The said notice was served on the assessee on the same date and drew our attention to first page of the assessment order. Thereafter, the AO issued notice u/s. 142(1) of the Act and completed re-assessment u/s. 147 of the Act. He argued that the AO followed every procedure in detail in completing the re- assessment u/s. 147 of the Act. The argument made by the ld. AR in respect of not having approval from CIT u/s. 151 of the Act is incorrect. The AO taken approval from the Competent Authority and issued notice u/s. 148 of the Act. He vehemently argued that there was no substance in the argument of the ld. AR in treating the re-assessment completed u/s. 147 is void-ab-initio and supported the order of the ld. CIT(A). 5. Heard both the parties and perused the material available on record. As discussed above, the ld. AR vehemently argued that there was no approval by the Competent Authority u/s. 151 of the Act, in response to which the ld. DR supported the order of the ld. CIT(A) in holding the re- assessment is valid. In such circumstances, let us examine the material available on record filed by the assessee from pages 1 to 46 of the paper book. 6. We note that the first para of the assessment order shows that on the basis of information received, the AO on the belief that income escaped 4 ITA No.1692/PUN/2019, A.Y. 2010-11 assessment issued notice dated 31-3-2017 u/s. 148 of the Act with the prior approval of the Pr. CIT-2, Aurangabad. There is no dispute with regard to the date of notice by both the parties. Further, on perusal of page 36 of the paper book which shows that the Pr. CIT-2, Aurangabad has accorded approval u/s. 151 of the Act for initiation of proceedings u/s. 147 of the Act in the case of the assessee for A.Y. 2010-11. Though the letter dated is 31-3-2017, the endorsement in the bottom is dated 07-04-2017. It is clear from the record that the approval was not available with the AO as on the date of issuance of notice u/s. 148 of the Act, for the reason that Pr. CIT is in Aurangabad and AO is in Latur. 7. On an examination of the provisions u/s. 151 of the Act which contemplates sanction for issuance of notice u/s. 148 of the Act, wherein, it is provided in the proviso to sub-section (1) of sec. 151 of the Act put the restriction on the AO that no notice shall be issued unless the Chief CIT or CIT is satisfied from the reasons required by the AO. Page Nos. 37 and 38 of the paper book are the copies of recording the reasons for initiating proceedings u/s. 148 of the Act and for obtaining the approval of the Pr. CIT-2, Aurangabad. On close examination of the same shows that the Jt. CIT endorsed that he satisfied with the reasons recorded and to issue notice u/s. 148 of the Act. Further, down below, there is printed endorsement by the Pr. CIT-2 Aurangabad showing that he satisfied on the basis of the fact referred in the copy of reasons recorded to re-open the assessment and to issue notice u/s. 148 of the Act, but however, we find no date mentioned by the Pr. CIT to the said endorsement. The proviso to sub-section (1) of sec. 151 of the Act as it stood for F.Y. 2009-10 relevant to the assessment year under consideration explains no notice u/s. 148 of the Act shall be issued after the expiry of four years from the end of the 5 ITA No.1692/PUN/2019, A.Y. 2010-11 relevant assessment year unless Chief CIT or CIT satisfies that it is a fit case for reopening on the basis of reasons recorded. In these circumstances, we note that the assessment year under consideration is 2010-11, admittedly four years expires from the relevant assessment year i.e. (31-3-2011 to 31-3-2015). Therefore, it clearly established the AO issued notice without approval/sanction as on the date of issuance of notice u/s. 148 of the Act. As discussed above, there was no approval/sanction by the Pr. CIT, Aurangabad for issuance of notice u/s. 148 of the Act which is clear from page 38 of the paper book, vis-a-vis the letter dated 31-03-2017 at page 36 of the paper book, further, the date of endorsement as 07-04-2017 which establishes that there was no approval/sanction in the possession of the AO on the date of issuance of notice u/s. 148 of the Act. Notice dated 31-03-2017 u/s. 148 of the Act cannot be upheld on the ground that there was no approval/sanction as required under the law, the re-assessment made thereon without sanction/approval as provided under the law is liable to be quashed, resulting re-assessment is invalid. 8. The assessee raised another issue before the AO challenging validity of the re-assessment, submissions of which reproduced by the AO in page Nos. 5 & 6 of the assessment order wherein it is in the context of non- service of notice u/s. 143(2) of the Act on the assessee. On an examination of the record, we find a chart tabulated by the AO in pages 1 and 2 of the assessment order clearly shows that no notice u/s. 143(2) was issued, except notice u/s. 142(1) and 271B(1) of the Act. Before us also, the ld. DR fairly conceded that no issuance of notice u/s. 143(2) is reflected in the record. 6 ITA No.1692/PUN/2019, A.Y. 2010-11 9. Further, it is also noted that a contention was raised before the AO that no tangible material was in the possession at the time of recording reasons. It is noted that the assessee requested the AO to supply statement of Shri Anand Kumar Sharma recorded u/s 132(4) of the Act as it was stated to be the basis for re-opening of assessment. On perusal of para 1.3 of the assessment order, we note that the assessee sought by letter dated 20-12-2017 to supply the said statement. The ld. AR vehemently contended that the AO called the same from Dy. CIT on 20-12- 2017 and furnished to the assessee on 21-12-217. It was submitted by the ld. AR that there was no tangible material available with the AO to reopen the assessment as on the day of recording reasons and without there being the same, the reopening is bad in the law. On perusal of the reasons recorded for A.Y. 2010-11 at page 1.1 of the paper book that it only mentions that on the basis of search and seizure operation conducted u/s. 132(1) of the Act in the case of Shri Anand Kumar Sharma wherein he alleged to have provided bogus loans to the assessee. We find when the said statement is not available with the AO as on the date of reasons recorded for reopening assessment. As discussed above pages 37 and 38 of the paper book, is the form for recoding reasons for initiating proceedings u/s. 148 of the Act and also for obtaining approval, on an examination of same, we find the said form does not contain the statement of Shri Anand Kumar Sharma, which is the basis for reopening, in the absence of same, that the Jt. CIT and Pr. CIT-2 mechanically without proper application, given the said approval beyond the date, is not justified, resultantly makes the reassessment dated 30-12-2017 passed u/s. 143(3) r.w.s. 147 of the Act invalid. Thus, ground Nos. 1.(a) to 1.(f) are allowed. 7 ITA No.1692/PUN/2019, A.Y. 2010-11 10. In view of our decision in ground Nos. 1.(a) to 1.(f) holding the reassessment is bad under law, consequently, grounds raised in ground Nos. 2.(a) to 2.(k) becomes academic, requiring no adjudication. 11. In the result, the appeal of assessee is allowed. Order pronounced in the open court on 21 st April, 2023. Sd/- Sd/- (Dr. Dipak P. Ripote) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 21 st April, 2023. रदव आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-2, Aurangabad 4. The Pr. CIT-2, Aurangabad 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, “बी” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गार्ड फ़ाइल / Guard File. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER, वररष्ठ दनजी सदचव / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune